Embargoed until 7.00am 26 February 2001
Ultra Electronics Holdings plc
(“Ultra” or “the Group”)
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 30 DECEMBER 2000
FINANCIAL HIGHLIGHTS
Year ended / Year ended / Change30 December 2000 / 30 December 1999
Turnover / £226.9m / £193.0m / +18%
Operating profit* / £30.3m / £24.5m / +24%
Profit before tax* / £25.6m / £23.2m / +10%
Earnings per share* / 29.0p / 25.9p / +12%
Dividend per share - final
- total / 6.5p
9.7p / 6.0p
9.0p
* before amortisation of goodwill
§ Emphasis on battlespace IT being rewarded with contracts
§ Successful, strategic acquisition of DF Group
§ Order book of £275m, increased over 1999
§ Shared Data Environment initial successes
Dr Julian Blogh, Chief Executive, commented: “2000 saw another successful year of growth for Ultra as well as important progress in the strategic development of the Group. Sales for 2001 and subsequent years are supported by an order book of approximately £275m, which includes over £35m of orders for the Astute submarine. This, together with a continuing strong order backlog for our Anti Submarine Warfare products, gives the Board confidence regarding Ultra's future growth prospects.”
- Ends -
Enquiries:
Ultra Electronics Holdings plc (26.02.01) 020 7601 1000
Dr Julian Blogh, Chief Executive Thereafter 020 8813 4321
David Jeffcoat, Finance Director www.ultra-electronics.com
Square Mile Communications 020 7601 1000
Susan Ellis or Kirsty Hall
Embargoed until 7.00am 26 February 2001
Ultra Electronics Holdings plc
(“Ultra” or “the Group”)
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 30 DECEMBER 2000
Ultra Electronics has enjoyed another year of good growth in both sales and profits, confirming the continued success of its policy of concentrating on niche areas in Aerospace and Defence. Total sales have grown by 18%, profit before tax by 10% and EPS by 12%.
Furthermore, the Group made important progress this year in strengthening its strategic position through successes in new markets, investment in new products and the acquisition of complementary businesses.
RESULTS
Group turnover increased by 18% in 2000 to £226.9m; sales have now grown on average at more than 15% per annum over the past five years. Operating profit before goodwill amortisation was 24% higher at £30.3m and has increased at an annual rate of 21% since Ultra was first listed in 1996. The profit result reflects an improvement in operating margin to 13.4% in the year (1999: 12.7%). A feature of these results was continuing strong organic growth; underlying sales were 7% higher and underlying operating profit increased by 10% due to the higher margin.
Profit before tax and amortisation was 10% higher at £25.6m (1999: £23.2m). Earnings per share increased by 12% to 29.0p and the Group ended the year with a net debt of £55.9m after capital expenditure of £3.3m, new product investment of £9.6m and the acquisition of the DF Group for £44.7m.
Dividend
The proposed final dividend is 6.5p, bringing the total dividend for the year to 9.7p. This represents an increase of 8% over last year. If approved, the dividend will be paid on 30 April 2001 to shareholders on the register on 23 March 2001.
STRATEGIC DEVELOPMENT
In an environment of industry consolidation, Ultra will continue to pursue its strategy of focusing on the development and supply of technically advanced components and sub-systems to the major prime contractors. Ultra is also evolving to be able to supply sophisticated products and integrated systems directly to the end-customer and increasingly to be the prime contractor for these systems. Ultra now is of a size and has the financial strength for customers to feel comfortable in awarding contracts of an ever-increasing value to the Group.
Ultra has enhanced its capability to provide systems to support the military need for fast reaction and mobility. During the year, the winning of a number of contracts of strategic importance rewarded this effort. These included a development contract for a major part of the electrical and electronic systems for the Anglo-German-Dutch MRAV vehicle or ‘battlefield taxi’; a demonstration contract for MINDER, a land mine detection system and further contracts to enhance our battlespace information systems. Each of these could play a major role in the growth of the Group in the medium term.
To reflect the shift in Ultra’s activities, its two divisions have been renamed ‘Air and Land Systems’ and ‘Information and Sea Systems’ and the organisation adapted to ensure continuing focus on growth areas. Ultra’s traditional business continues to prosper and an important success was achieved when the only competitor for the next generation UK sonobuoy system withdrew from the programme.
ACQUISITIONS
In April 2000, Ultra made its largest acquisition to date when it purchased the DF Group consisting of two divisions, Datel Defence Ltd (Datel) and Ferranti Air Systems Ltd (FASL), for £44.7m funded through its banking facilities. Datel is a software and systems business that provides software solutions for the defence industry. One of its principal activities is to produce software for mission computers on military aircraft. Datel also supplies the internet-based Shared Data Environment product.
FASL provides Information Technology solutions for airports worldwide from flight information displays providing passenger information to management of airport databases and the integration of specialist airport IT systems. It is an excellent fit with Ultra’s original Airport Information Systems business, incorporating TagTrak baggage reconciliation, and on 1 January 2001 the businesses were integrated to create a broader airport information systems business.
Both arms of this acquisition operate in areas of high market growth and are expected to contribute significantly to the expansion of Ultra in the future.
OPERATIONAL REVIEW
Air and Land Systems
Air and Land Systems comprises ten businesses in the UK and in North America supplying electronic and electromechanical components, sub-systems and products for civil aerospace and defence applications.
Air and Land Systems maintained its record of strong growth over the course of the year, with sales 22% higher at £158.3m. Key contributors to this performance were a high demand for sonobuoys and on-board acoustic equipment, an excellent result at Measurement Systems Inc in the USA and the first year impact of Datel Defence Ltd. Excluding sales from Datel, the division recorded organic sales growth of 13%. Organic profit growth was 12%, contributing to an overall operating profit for the division of £22.1m, an operating margin of 14%.
The acquisition of Datel has enhanced Ultra’s systems and software capabilities and broadened the Group’s offering for future aircraft. A major part of Datel’s activity is supporting BAE Systems on sub-systems developed for the various versions of the Tornado aircraft. As the in-service life of Tornado is extended by continued weapon systems upgrades, Datel should benefit from a constant stream of specialist work, for which it is an integral part of BAE Systems’ team.
During 2000, Datel has developed and made initial sales of its highly promising Shared Data Environment product. SDE allows multi-site working for a project team with secure exchange of project data in a controlled and configured fashion across the internet.
As expenditure on Anti Submarine Warfare (ASW) remained buoyant, Ultra’s sonobuoy businesses continued to perform well:
· At Undersea Sensor Systems Inc, Ultra’s US sonobuoy business, production started in its newly built facility on the three primary products, DIFAR, DICASS and ADAR.
Page 2 of 10
· Ultra was awarded 55% by value of the US Navy’s sonobuoy requirement for Fiscal Year 2000. In addition, the Group booked significant sonobuoy export orders worldwide.
· All three of Ultra's sonobuoy businesses are involved in feasibility studies for new advanced sensor systems capable of detecting, tracking and reporting contacts. This should ensure a continuing flow of new sonobuoy products for the future.
Civil aerospace is following a long-term trend of 5% per annum increases in demand for passenger travel. This underpins the demand for new aircraft. Ultra supplies equipment mainly to Airbus Industrie which continues to increase aircraft production rates year on year. This has generated increased demand for the landing gear computers and harnesses that are supplied by the Controls and Electrics businesses respectively.
The other businesses in this division also continued to perform well:
· MSI in the USA achieved a significant win on the "AVCATT–A" helicopter tactical trainer as the supplier of choice for a significant sub-system on this multi-year programme. This award moves MSI up the supply chain from component supplier into systems design and manufacture.
· Electrics is developing innovative electronic controls and monitoring systems for advanced land fighting vehicles. Development work continues successfully on the Anglo-German-Dutch MRAV vehicle, the “battlefield taxi”.
· Weapons Systems was awarded a five-year extension to the contract, with enhanced scope, for providing repair and overhaul services for the UK MoD’s stock of Sidewinder missile guidance and control systems.
· The innovative High Pressure Pure Air Generator (HiPPAG) equipment from Weapons Systems was supplied for the upgrade of a number of front line UK and US aircraft. Excellent progress was achieved in demonstrating the suitability of HiPPAG for pneumatic ejection of weapons from aircraft.
· Flightline achieved good progress, winning its first production order to supply sonobuoy receivers for the upgraded US helicopter, the SH60R.
Information and Sea Systems
Information and Sea Systems comprises seven businesses in the UK and North America, supplying IT solutions and command, control and communications systems, sub-systems and products for aerospace and defence applications.
Sales in 2000 were £68.6m, an increase of 8% over the previous year. After eliminating the impact of the acquisition of FASL and the full year effect of the 1999 acquisition of Advance Programming Concepts Inc, organic sales declined by 7%. A number of long running contracts have come to an end, notably for the supply of command systems equipment for the Type 23 frigate. New programmes, including the UK Astute and the US Virginia classes of submarine, will reach full activity levels in 2001 for Ultra. At the year end, the order book was up by 47% over the previous year, giving confidence that positive growth will be achieved in Information and Sea Systems in 2001. Moreover the operating margin increased by nearly 2% to 12% as a result of a series of initiatives to reduce the cost base in the division. Organic profit growth of 5% was recorded, bringing the operating profit to £8.2m.
Page 3 of 10
During the year, the Group completed the acquisition of FASL, which has enhanced Ultra’s capability in Information Technology systems for airports and airlines worldwide. FASL operates in a growth market - independent data sources show growth projections for worldwide airport infrastructure spending of above 5% per annum. As part of a growing product portfolio, FASL has been selected as BAA’s preferred supplier for the Supervisory Control And Data Acquisition (SCADA) system for London Heathrow Airport. Given the likely level of future investment at Heathrow, this is a major opportunity.
Success in future armed conflicts will increasingly depend on managing information flows effectively. Digitisation of the battle-space is becoming, therefore, a dominant theme in defence expenditure. Ultra’s businesses are well positioned for this development:
· APC, acquired in 1999, has brought a leading-edge capability to fuse data from many different types of military sensors and data links and to display a real-time view of the tactical battlespace. Over 200 of its Air Defence Systems Integrator (ADSI) product have been deployed worldwide by US and Allied forces to fulfil this role.
· Ultra’s Command and Control Systems has been awarded an MoD-funded feasibility study for the MINDER land mine detection and route proving system, for which Ultra is leading an international team.
· Command and Control Systems has developed, in collaboration with DERA, the ‘Olympus’ collaborative planning aid. This practical demonstration of battlefield digitisation has successfully completed field trials with the UK Army. Ultra's work with the Defence Geographic and Intelligence Agency has enhanced their capability to manage both imagery and maps and has improved the process of delivering data to their military customers.
· Ocean Systems was awarded a contract by NATO to develop and supply an advanced satellite-linked sonar system.
In the field of electric power management for naval vessels, Ultra businesses in the UK and North America have been brought under single management to ensure co-ordination of marketing and product development. Ultra’s power conversion technology will be applicable to future “all electric warships” and Ultra is well placed to exploit this capability in the US as well as in the UK.
GROUP OUTLOOK
Ultra’s past emphasis on, and investment in, battlespace IT and military vehicle electronics is beginning to be rewarded with new contracts. Furthermore, defence spending on electronics continues to grow and represents an increasing percentage of total defence budgets. Long-term passenger growth in civil airlines shows no signs of slackening as reflected in higher production rates for Airbus and the recent decision to launch the A380.
Group trading performance in 2001 to date has been satisfactory. Sales for 2001 and subsequent years are supported by an order book of approximately £275m, which includes over £35m of orders for the Astute submarine. This, together with a continuing strong order backlog for our Anti Submarine Warfare products, gives the Board confidence regarding Ultra's future growth prospects.
- Ends -
Enquiries:
Ultra Electronics Holdings plc (26.02.01) 020 7601 1000
Dr Julian Blogh, Chief Executive Thereafter 020 8813 4321
David Jeffcoat, Finance Director www.ultra-electronics.com
Square Mile Communications 020 7601 1000
Susan Ellis or Kirsty Hall
Page 4 of 10
Notes to Editors:
Ultra Electronics Holdings plc is a group of specialist businesses designing, manufacturing and supporting electronic and electromechanical systems, subsystems and products for international defence and aerospace markets. The Group, which employs 2,500 people in the UK and North America, focuses on high integrity sensing, control, communications and display systems with an increasing emphasis on integrated Information Technology solutions.
Ultra Electronics Holdings plc